House price growth in the South East is set to surge faster than in London in the coming years as buyers spread their search outside the capital, a property website predicts.
Rightmove tipped Southampton, Luton and Brighton as the “country’s best property bets” after seeing signs of the ripple effect of house hunters who have been priced out of London.
Its latest data found that sellers’ asking prices across England and Wales edged up by 2.6% month-on-month in October to reach £271,669 on average, which is the lowest monthly rise seen at this time of year for six years.
Rightmove said buyers are becoming “more wary and value conscious”, against a background of interest rate rises expected in 2015, a looming general election and property prices having already increased strongly in many areas, particularly London.
Some sellers may find that their asking prices are too optimistic, although there are “few signs” of the market slowing in the South East, which is now the strongest-performing region across England and Wales over the last 12 months, it said.
Asking prices in the South East have lifted by 10.0% over the last year to reach £355,874 on average. Those in London, which has until recently been seen as the engine of price growth, have increased by 9.6% over the last 12 months to reach £596,692.
Analysis by Rightmove and Oxford Economics forecasts that the South East will be the region with the highest increase in property values over the next five years, with a 37% increase over the period, ahead of London at 33% and the national average at 30%.
Miles Shipside, director of Rightmove, said: “Those looking for price appreciation in the country should seriously consider the South East, and some may wish to fine-tune their search to the three top locations of Southampton, Brighton and Luton.”
He said price increases in all three of these areas are predicted to top 40% over the coming five years. Gains in these areas are due to a “price over-spill” coming from neighbouring areas as well as their good links to London, he said.
Every region across England and Wales has seen asking price growth over the last 12 months, from the South East’s 10.0% rise to a 2.6% uplift recorded in the North West, where the typical asking price is £168,751.
In Wales, values have increased by 3.5% over the last year to reach £171,476.
A string of recent studies have pointed to the pace of house price growth generally slowing down, which has also partly been put down to toughened mortgage lending rules which came into force in April.
However, many lenders are showing an increased appetite to offer competitive mortgage deals and there has been a string of recent rate cuts on home loans as lenders look to meet their end-of-year targets.
Marc Cox, director of estate agent Mishon Mackay in Brighton, said: “Brighton benefits from being only a 50-minute commute into London which means that price rises in the capital have always had a knock-on effect on prices here.
“In the past year, prices have gone up around 20% and the demand from non-residents means we’re now seeing one-bed flats going for £200,000.
“We recently sold, subject to contract, a three bed terraced house in an area right next to Hove station for nearly £500,000, which 20 years ago would have sold for about £35,000.
“So while the demand is there from buyers, the uncertainty of interest rate rises, the upcoming election and how tough it is to get a mortgage mean that supply is only slightly up on last year and there’s still only around half the stock that we had back in 2006/2007.”